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Dubai: 6 months too short to restructure Dubai World
08 December 2009 05:14 am
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Six months is not enough time to restructure indebted state-controlled conglomerate Dubai World, the emirate's finance chief said on Tuesday, adding that it had enough assets to meet its obligations.

Dubai World met its main creditors on Monday to discuss its request to delay repayment of $26 billion, which has shaken global markets and confidence in the Gulf business hub.

Dubai shocked the world in November when it asked creditors for a six-month standstill on debt worth billions of dollars held by Dubai World and its subsidiary Nakeel.

"The period of six months would be too short for a full restructuring," Abdulrahman al-Saleh told Al Arabiya television said. "The six-month period would focus on the creditors, the contractors and so on."

Dubai's government would support the group "as an owner," he said without being more specific.

"The government is present to provide backing as an owner ... we would like to emphasize the distinction between guaranteeing and backing. The company receives large backing from the government since its inception," Saleh said.

He did not rule out using the land bank of Nakheel, the group's developer, so long as local law permitted but said the issue could only be decided through talks between the firm and its lenders.

Dubai allows foreign ownership only in certain free-zone areas.

Saleh said it was premature to talk about cash injections into Nakheel. The developer has already received funds from a $20 billion fund aimed at helping the emirate's government-linked companies.

Saleh also reassured investors that the government would be able to tap debt markets in the future. Dubai raised about $2 billion in an Islamic bond sale earlier this year as part of a wider $6.5 billion borrowing program.

"We believe yes ... the media exaggerated the situation ... Dubai is capable of meeting its sovereign debt," he said when asked if the debt market would accommodate any borrowing requests by Dubai in the near-future.

Dubai's debt rescheduling plans could continue beyond the recently announced Dubai World standstill, extending to about $47 billion on the back of further restructuring needs of government-related entities, Morgan Stanley said in a note on Tuesday.

When asked if the agencies had sought data from the government about the firms they downgraded, Saleh said: "Ratings agencies did not communicate with the government."

He did not say when Dubai might tap the markets next.

Saleh reaffirmed that Dubai World had enough assets to meet its obligations but did not give details of which assets would be available for sale.

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